British Columbia was the first jurisdiction in North America to apply a consumer tax on carbon.
It was introduced in February, 2008, by the Liberal government of Gordon Campbell, who was as conservative a politician as they come. But those were the days when climate change and the future of the planet had started to become a true cause célèbre. Many people argued the tax would irrevocably hurt the economy, but Mr. Campbell found political allies in the climate fight, including then-California governor Arnold Schwarzenegger.
In April of this year, the B.C. tax rose to $65 a tonne from $50. When it officially kicked in on July 1, 2008, it was $10.
Given that the B.C. levy is the longest-running carbon tax in the country, it offers the best available data for assessing a carbon tax’s economic impact in a Canadian context. Recently, University of Calgary economists Trevor Tombe and Jennifer Winter analyzed how the tax has affected affordability in B.C.
Their conclusion? Not much at all. “For most goods and services, B.C.’s carbon tax of $65 per tonne adds less than 0.3 per cent to the cost,” the authors wrote in a summary of their paper.
Using the latest figures from Statistics Canada, the two economists calculated the effective carbon tax rates on a range of goods and services. They fluctuated from a high of 0.92 per cent for air transportation to lows of 0.11 per cent for financial services. In between, they established carbon tax rates of 0.28 per cent for alcoholic beverages to 0.2 per cent for clothing and footwear.
Again, the impact of B.C.’s carbon tax on people’s day-to-day lives in the province has been negligible. Meantime, numerous studies have found the tax has helped bring down emissions by 5 per cent to 15 per cent.
This is relevant, of course, because federal Conservative Leader Pierre Poilievre has made killing Prime Minister Justin Trudeau’s national carbon tax his No. 1 priority. Why? Because, he insists, it’s an economy killer, responsible for no end of misery for the Canadian public.
Mr. Tombe also recently ran some numbers for the CBC on which households in Canada would gain or lose the most if Mr. Poilievre wins the next election and follows through on his threat to “Axe the Tax,” the name of his carbon-tax-killing campaign.
It’s a crusade, it should be noted, in which he rarely, if ever, mentions the rebates the majority of Canadians receive from the carbon tax they pay. But then, that his is modus operandi.
Again, using relevant Statistics Canada data, Mr. Tombe told the CBC that getting rid of the carbon tax would “harm a much larger portion of lower- and middle-income households than it would higher-income households.”
Why? Well, the more fossil fuels you consume, the more carbon tax a person pays. It’s levied on gas, diesel, natural gas and propane. Then there are the indirect costs associated with the carbon tax – price increases for goods and services that are paid by businesses but then passed on to consumers.
People who have lots of money fork it out on both those fronts. But they get the same rebates as people with far less income. Consequently, the rebates have a bigger impact on families with lesser income – they notice it more. It makes up a more sizable portion of their total income.
According to Mr. Tombe’s calculations, 94 per cent of households with incomes below $50,000 receive carbon tax rebates that exceed their carbon tax costs this year. According to the CBC story, about half of households in this income category realize a net gain of between $20 and $40 a month. Meantime, just over half (55 per cent) of households with incomes over $250,000 receive more in rebates than they do in carbon tax costs. In other words, high-income households would benefit the most if the tax were axed.
Of course, this is not information that is likely to make its way into Mr. Poilievre’s next YouTube video. He has determined that his campaign against the carbon tax is a political winner – campaigns against taxes often are – and he will not let the facts get in the way of a good story.
But the truth is, the federal government’s carbon tax has helped more people than it’s hurt. Plus, it’s the centrepiece of its climate change agenda, the one thing this country has been able to hang its hat on when it comes to showing the world what we’re doing to save the planet.
Mr. Poilievre plans to blow it all up. If he becomes prime minister the tax will be gone, along with any hope of cutting GHG emissions any day soon.
Gary Mason